Remember that episode of Seinfeld where Lloyd Braun wants to eat the hot-dog that’s been sitting in the movie theatre snack-bar since the Silent Era?
The snack-bar attendant says, “You’d have to be insane to eat that!”
Then Kramer sticks up for Lloyd and replies, “This is a perfectly sane food to eat! One hot dog, please!”
Fast forward a scene to Kramer throwing up on the street…
…here’s a similar story that ends the same way…
On Monday evening, I was part of a multiple-offer scenario where my client put down $727,000 for his chance to get his hands on a dilapidated bungalow on Banff Road, listed at $599,000.
Even after offering $128,000 over the asking price, we lost by $63,000.
There were twenty-one offers on the property, including ours.
As crazy as it sounds to pay $790,000 for a 32 x 108 foot lot that is “land value only,” in anticipation of building a house and selling it for $1,549,000, it’s even crazier to be involved in the offer process when you know that there are twenty other agents with twenty other builders vying for the same project.
That’s nothing compared to what happened to 89 Lowcrest Boulevard yesterday afternoon.
What I’m about to tell you will absolutely SHOCK YOU! I mean, it’s absolutely unbelievable! Kind of like when my friend Damir told me that he was Estella Warren’s “first” if you know what I mean; you just nod, smile, and say “Uh-Huh.”
Yesterday afternoon, 89 Lowcrest Boulevard received SEVENTY-SEVEN offers!
Offers were at noon, and at 6PM, they were still sorting through the mess. All this for a 48 x 105 foot lot, also “land value only,” located at Warden & Sheppard.
I just can’t figure out why anybody in their right mind would bother? I mean, if you do “win” this bidding procedure, how can you even entertain the idea that you didn’t severely overpay for this property? You beat seventy-six other offers, and paid more than seventy-six other builders were willing to pay to make this project profitable!
From a Realtor’s perspective, I can’t imagine advising my clients to make a play for this property in good conscience. I guess my pitch would go something like this:
“Hey Ted, listen: there’s this great little bungalow up in Scarborough that we can pay like 150% of asking price for, and beat out the other near-hundred other bidders! I think there’s a lot of money in this project, tons of margin, and all we have to do is pay more than seventy-six other knowledgeable people in your industry would every consider paying, and it’s all ours!!”
I just don’t see how the eventual “winner” in this scenario was able to wrap his head around the number that he put down on paper.
Let me make my point more clear by using a sports analogy. Over the summer, the San Jose Sharks let it be known that goaltender Vesa Toskala was available. The price was already steep, since San Jose was asking for more than just a 1st round pick, but even steeper when they insisted that their trading partner must take problem-child Mark Bell off their hands. While twenty-nine G.M.’s turned down the deal, one stepped up to the plate: John Ferguson Jr. of the Maple Leafs. A few weeks later, the N.H.L. suspended Mark Bell indefinitely for his recent drunken hit-and-run incident. Toskala and the suspended Bell cost Toronto a 1st, 2nd, and 4th round pick.
My point to this superior sports analogy?
When you are the highest bidder in a multiple-offer situation, you have to realize that you paid more than anybody else was willing to pay for the exact same product. And when there are seventy-six other offers, in this case, all from builders who share your vision of constructing a house on the property and selling it for a substantial profit, you have to wonder why they didn’t bid as much as you. What do you see in the project that seventy-six of your colleagues don’t?
How can you feel good about your offer and subsequent “win” when nobody else was willing to do what you did?
Are you going to prove seventy-six people wrong?
How many people have to jump off the bridge before it just becomes the right thing to do?
I think what is missed in all this is why anybody would even bother putting in an offer when there are seventy-seven others. It’s like playing the lottery, although millions do it everyday, so maybe I’m wrong. I just think it’s a waste of time, effort, energy, and ultimately it’s a waste of paper.
The irony is, I’m sitting here right now waiting for offers to come in on a property I’m selling, and we take offers today at noon. While 89 Lowcrest had seventy-seven offers (and agents are still trying to register offers a day later), I’d settle for just ONE offer on my Leaside listing.
Remember when ONE offer was all it took?
Those days are long, LONG gone…